Luxottica Joins “CEO Change” Fashion
The Italian luxury eyewear maker has announced the departure of its co-CEO, Adil Mehboob-Khan. The company joins the large group of companies in the sector that have changed their CEO in the last year.
Chanel, Balenciaga, Dior, Gucci, Donna Karan … There are many companies that have announced the departure of its chief executive officer in the last year. However, Luxottica´s case is quite different from the other companies mentioned. While most changes have come after many years in office, in the case of the CEO of the maker of Ray-Ban glasses this is the third change in only 15 months. Andrea Guerra, who spent 10 years at the helm of the company, left his job in September 2014, being replaced by Enrico Cavatorta, barely spent a month as head because of differences on corporate governance. Khan joined Luxottica from Procter & Gamble in October 2014.
Adil Mehboob-Khan will depart at the end of February and, according to the company, his departure is amicable (influenced in part because it will receive compensation of €7 million for a year’s work). Mehboob-Khan will be replaced by the company’s founder, Leonardo Del Vecchio, who is 80 years old. It is without doubt an interim appointment, as the market assumes that a replacement be sought as soon as possible, probably by one of the executives of the business units of the company.
The news was badly received by the market, scared of instability arround the firm. It has fallen as many as 9% in the Milan Stock Exchange, raising to almost 20% the drop since November. In addition, the announcement coincided with the release of its 2015 revenues, which have been slightly below the market consensus forecast. Specifically, revenues reached €8.84 billion, around 100 million less than expected.
The growth rate was 4.3% (disregarding the effect of the exchange rate), with a clear downward trend throughout the year. The fourth quarter growth was only 2%. At current prices the company is worth €25 billion euros, with a PE of 32 times, a level considered high by most of the experts that recommend “hold” the stock with a appreciation potential of around 5%.
Disclosure: The Luxonomist not responsible for the views expressed in the article. The text was written freely expressing ideas, without receiving any compensation. The author has no business relationship with any of the companies whose shares are listed in this article.